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  2007 NPC

China's lawmakers adopt two landmark laws

(Xinhua)
Updated: 2007-03-16 10:05


Deputies to the National People's Congress walk to the Great Hall of the People in Beijinig for the closing ceremony of their annual session March 16, 2007. The lawmakers adopted two landmark laws -- the property rights law and the corporate income tax law. [Xinhua]
China's parliament, the National People's Congress, adopted two landmark laws -- the property rights law and the enterprise income tax law -- Friday morning at the closing ceremony of its annual session in the Great Hall of the People in Beijing.

The corporate income tax law was adopted with 2,826 votes for and 37 against, and 22 abstentions, a key signal of a phase-in end of superior treatments to foreign investors for two decades.

The 60-article law was ratified by the lawmakers as they concluded their 11.5-day annual full session at the Great Hall of the People in downtown Beijing.

The voting result, announced by NPC Standing Committee Chairman Wu Bangguo, was warmly applauded by lawmakers. Four legislators did not cast their votes. The law is due to take effect on January 1, 2008.
Experts say the law marks an adjustment of China's policies toward foreign investment in the current times.

The law, which sets unified income tax rate for domestic and foreign companies at 25 percent, came after years of criticism that the original dual income tax mechanism is unfair to domestic enterprises.

Currently, the actual average income tax burden on Chinese companies is 25 percent, while that on foreign enterprises is 15 percent. Many people think such a policy forces domestic businesses to face tougher competition since China's accession to the World Trade Organization (WTO) in 2001.

"It's a basic requirement of the WTO to create a fair environment for competition, and the new unified income tax will, in a real sense, grant foreign investment the same treatment as domestic businesses," said Miao Gengshu, chairman of the China National Foreign Trade Transportation (Group) Corp.

Apart from increased income tax, foreign companies will also be wiped from some other tax incentives, including pre-tax reduction and tax rebate for re-investment, in the future, insiders say.

China is gradually taking back preferential policies toward overseas-funded businesses, which has been levied the same tax as their domestic counterparts in the use of urban land from January 1 this year.

It only took less than a minute for the nearly 3,000 NPC lawmakers to pass the much-revised bill, which had gone through a lengthy legislation process of more than 13 years and a record seven readings, by an overwhelming majority as the NPC concluded its annual full session in the Great Hall of the People in downtown Beijing.

The lawmakers applauded warmly after NPC Standing Committee Chairman Wu Bangguo announced the voting results. A total of 2,799 lawmakers voted for the law and 52 against. Thirty-seven abstained and one didn't cast vote.

The 247-article law, which is due to come into effect as of October 1, 2007, stipulates that "the property of the state, the collective, the individual and other obligees is protected by law, and no units or individuals may infringe upon it".

This is the first time that equal protection to state and private properties has been enshrined in a Chinese law, which analysts say marks a significant step in the country's efforts to further economic reforms and boost social harmony.

China's state and private properties once suffered from serious violations due to a lack of respect for and protection of property rights.

"The significance of the law's adoption lies in the fact that it helps complete China's property rights system," commented Jiang Ping, former president of the Chinese University of Politic Science and Law.

"Only when people's lawful property is well protected could they have the enthusiasm to create more wealth and could China maintain its economic development," said Jiang, a scholar involved in the early drafting of the law.

The concept of improving the protection of private property was first brought up at the 16th National Congress of the ruling Communist Party of China (CPC) held in November 2002. In March 2004, the NPC adopted a major amendment to the Chinese Constitution, stating that people's lawful private property is inviolable.

The draft of the property law was first submitted to the NPC Standing Committee in 2002 and had been reviewed for an unprecedented seven times before it finally reached this year's parliament session for final approval.

Observers said the laws are the fruit of China's reform and opening up and will in turn stimulate the reform and opening-up of the country.

Wang Shengming, vice-director of the Commission of Legislative Affairs of the NPC Standing Committee, said the property law showed the spirit of reform and opening up of China, since it protects the order of the socialist market economy and grants equal protection to public and private property.

Liu Hezhang, a member of the NPC Standing Committee, said the property law is a signal of further reform and opening up as its adoption suggests China will not start a new round of "capitalism or socialism" dispute.

Meanwhile, Lu Jianzhong, NPC deputy and chairman of Shaanxi Jiaxin Group, said the corporate income tax law, which puts domestic and foreign-funded enterprises on an equal footing for income taxes for the first time since China's opening up began in 1978, brings China's economy more in line with international practice.

Government work report

The lawmakers on Friday also endorsed the government work report delivered by Premier Wen Jiabao that underlines the people' s livelihood and sets the economic growth target at about 8 percent for this year.
Premier Wen's report was approved with 2,862 votes from the 2,889 NPC deputies present at the closing meeting of the parliament' s annual session.

Wen said in the report that the most important task of the government this year is to promote sound and fast economic development, with the growth of gross domestic product (GDP) projected at 8 percent, lower than the staggering 10.7 percent in 2006, which analyst say would be conducive to healthy economic development in the country.

President Hu Jintao and other top leaders also attended the closing meeting, presided over by NPC Standing Committee Chairman Wu Bangguo.

Prior to the ratification, the State Council, or cabinet, made 33 modifications, including 12 major ones, to the report according to the opinions of parliament members and political advisors.

The Chinese government promised to spend 391.7 billion yuan (50. 25 billion U.S. dollars) on agriculture, rural areas and farmers this year, as it vows to develop modern agriculture and build a new countryside.

To ensure all citizens share the fruits of China's reform and open-up, Wen said the government will expand the subsistence allowance system to all rural poor, with an aim to bring some 23.7 million poverty-stricken people under the social security net this year.

"We need to make education a strategic priority and accelerate the development of all types of education at all levels," said the premier.

The government is expected to invest 85.85 billion yuan (11 billion U.S. dollars) in this field this year, an increase of 41.7 percent over 2006.

The premier reiterated that the government will meet the energy saving and pollution control targets between 2006 and 2010 despite last year's setback.

The government set the goal of reducing energy consumption per unit of GDP by 20 percent and major pollutants discharge by 10 percent in the country's 11th Five-Year Plan for the 2006-2010 period.

A major task of the government to improve the people's livelihood is to promote medical services in rural areas. To energetically promote the new type of rural cooperative medical care system, the government will expand the trial of the services "cover over 80 percent of all counties, county-level cities and city districts in China," the premier said.

For this purpose, the government will allocate a total of 10.1 billion yuan (1.3 billion U.S. dollars) this year, 5.8 billion yuan (750 million U.S. dollars) more than last year.

"We will improve the mechanism for setting the RMB exchange rate, strengthen and improve foreign exchange administration, and actively explore and develop channels and means for appropriately using state foreign exchange reserves," Wen said, adding, "We will adopt a variety of measures to gradually ease the imbalance in international payments."

In the government work report, which covers every facet of the country's economic and social development, Wen said "building a solid national defense system and a powerful people's army is a strategic task in socialist modernization."

According the draft 2007 budget, which was also passed along with the annual plan for economic and social development, defense budget of China will increase by 17.8 percent to 350.92 billion yuan (44.94 billion U.S. dollars).

The NPC annual session, which began on March 5, also approved the property law and enterprise income tax law, as well as resolutions on the election of NPC deputies on the mainland, Hong Kong and Macao.

Lawmakers attending the annual session also adopted the reports on the work of China's Supreme People's Court and Supreme People's Procuratorate.



Question Session

The Supreme People's Court will send back cases to provincial courts for retrial if it evaluates that a death sentence has been passed without proper .

From our readers

 longer: This is a good even small step for both peoples to achieve some kind of mutual understanding.

 kennethchew: China must accelerate its spendings on defence, especially in the area of high-tech weaponry and R&D on outerspace technology if China is to be able to defence itself in any future war.

 Spend: China should spend and invest this money on many things China needs right now. One thing China needs is technology to control pollution and waste. China also needs energy technology.

 Ewald Widiner: I fully agree with Commerce minister Bo Xilai , my advice to the Chinese industry would be to counter this protectionism from the US and from the EU with quality,best achieved in educating and qualification of the workforce.

 Kris: I cannot understand why my country, Canada, has not sent him back.

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